This TFSA Portfolio was launched six years ago, in March 2012.
It is designed for readers who want to maximize capital gains in a Tax-Free Savings Account through 100 per cent exposure to domestic and international stocks. As such, it is suitable only for those who are willing to accept a higher degree of risk and volatility.
Here’s a look at the securities in the portfolio with some comments on how they have fared since our last review in September. Results are as of the afternoon of March 22.
iShares Core S&P/TSX Capped Composite Index ETF (XIC-T) This ETF tracks the performance of the S&P/TSX Composite Index. It was one of the world’s worst performers in 2017 and is in the red so far this year. However, we did manage a modest gain of 11 cents per unit during the period, and we received one distribution of 10.67 cents in December.
iShares S&P/TSX Small Cap Index ETF (XCS-T) Small-cap stocks in Canada have not been a great place to invest recently. The index is down 3.3 per cent in the past year, and this ETF has reflected that decline, losing 30 cents per unit in the past six months. We received a year-end distribution, but it wasn’t much, at 4.9 cents per unit.
iShares U.S. Small Cap Index ETF (CAD-Hedged) (XSU-T). While Canadian small caps floundered, U.S. small caps kept rolling merrily along. The units gained $2.03 in the latest period, and we received a December distribution of 18.3 cents per unit.
iShares Core S&P 500 Index ETF (CAD-Hedged) (XSP-T). U.S. stocks are still strong despite some recent setbacks. The unit price of this ETF, which tracks the S&P 500, is up $1.42 since the last review, and we received a semi-annual distribution in December of 25.36 cents per unit.
BMO Nasdaq 100 Equity Hedged to CAD Index ETF (ZQQ-T). This fund provides exposure to the top 100 stocks on the Nasdaq exchange, which is heavily weighted to technology stocks. They have been performing well, and this ETF was up $5.26 per unit in the latest period, for a six-month gain of 11.5 per cent. Plus, we received a year-end distribution of 27.7cents per unit.
iShares MSCI EAFE Index ETF (CAD-Hedged) (XIN-T). We recorded a small loss for this ETF, which tracks markets in Europe, Asia, and the Far East. The units are down 53 cents since the last review, but we recovered almost half that with a year-end distribution of 24 cents per unit.
iShares MSCI Frontier 100 ETF (FM-N). This ETF tracks major companies in Third World countries from Nigeria to Vietnam. We went through a long drought in this frontier markets ETF. But the sector has been recovering for the past 18 months, and the units posted a gain of US$3.04 in the latest period. We also received a tiny year-end distribution of 26.1 US cents per unit. As a result, we are now slightly on the plus side here.
iShares MSCI Emerging Markets ETF (EEM-N). Emerging markets had another good run. The units posted a gain of $2.15 in the latest six months, and we received a year-end distribution of 69.66 US cents per unit.
We received $6.31 in interest from the cash balance in our EQ Bank high-interest savings account.
Here’s a look at how the portfolio stood on the afternoon of March 22. The Canadian and U.S. dollars are treated at par, and commissions are not taken into account. The percentage in the Gain/Loss column represents the cumulative return since the portfolio was launched or since the security was added. The initial book value was $20,002.30.
Comments: We achieved a gain of 5.39 per cent in the latest six months, despite the fact the markets have been slowing down. Most of that came from the U.S. where Nasdaq and the S&P 500 led the way. Since inception, the portfolio has gained 67.7 per cent, which works out to a compound annual rate of return of 9 per cent.
We are not making any changes or new purchases this time. We have $759.72, which we will continue to keep in our EQ account at 2.3 per cent. I will revisit the portfolio in September.
Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to www.buildingwealth.ca.
Follow Gordon Pape on Twitter at twitter.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney